Quake, tsunami will hit Japan's fiscal health: Roubini

An office building burns in Tokyo after an earthquake March 11, 2011. A massive 8.9 magnitude quake hit northeast Japan on Friday, causing many injuries, fires and a four-metre (13-ft) tsunami along parts of the country's coastline, NHK television and witnesses reported Photo: REUTERS

Japan will invariably have to turn to a massive stimulus program to reconstruct the quake and tsunami-hit regions and this will inflate the country's fiscal deficit at a time when Tokyo is struggling to put a lid on deficit, Nouriel Roubini said on Friday.

“This is certainly the worst thing that can happen in Japan at the worst time,” Roubini said, according to Bloomberg.

Roubini, who had predicted the onset of the global financial crisis, said shocks like this will weaken the economic activity and that only a massive amount of fiscal stimulus can ensure economic recovery over the near term. He was speaking on Bloomberg Television.

Following the quake and the vicious tsunami it triggered, the central bank of Japan said it will work to ensure the country's financial stability. The finance ministry said it was too soon to assess the damage unleashed by the natural disaster in the country’s east coast.